Foreclosure
The legal process a lender uses to take and sell a property after the borrower defaults. Some states require a court case (judicial foreclosure), while others allow a faster non-judicial sale under a deed of trust.
Also called: foreclose, REO, bank-owned, repossession
Related terms
When one side fails to meet its obligations under a contract or loan. In a purchase, the contract spells out remedies, which often include the seller keeping the earnest money.
A sale where the lender agrees to accept less than the amount owed on the mortgage. It needs lender approval, can take months, and is usually an alternative to foreclosure.
An agreement where a struggling borrower signs the property over to the lender to settle the loan and avoid foreclosure. The lender must agree, and other liens can complicate it.
A temporary pause or reduction in mortgage payments granted by the servicer during a hardship. The missed amount is not forgiven and must be repaid later through a lump sum, repayment plan, deferral or modification.
A permanent change to a mortgage's terms, such as a lower rate, longer term or added balance, to make payments affordable after a hardship. It is negotiated with the servicer and avoids refinancing.
A document used in many states instead of a mortgage, where a neutral trustee holds title as security for the loan until it is paid. It usually allows non-judicial foreclosure, which is faster than going to court.